In my dealings with clients, especially once we have just finished setting up a home loan or the like. A new customer will then often ask me, ” so how often should I be checking my loan interest rate out?” The answer that you get, I think, will vary from you sourced your loan. If you used a good mortgage broker, the answer should be, in my opinion, at a minimum on an annual basis. You should also, at a minimum, be running your eye over your loan accounts every month.
Why I say, the answer to how often you should check on your financial situation, with regards to your mortgage, will differ depending on who you speak to, and who set your loan up, lies in the following sentence. These rates will only apply to new to bank customers or business. This is often in the small print on a lenders ” current specials ” sheet. It has also been shown that bank or lender loyal customers are often paying a lot higher interest rates than new to bank lenders. At the end of the day, lenders are businesses and exist to make money, and they make money off you through the margin on the interest rate that they charge. The person that works there is there to provide a service but, at the same time, make money for that lender. Hence why I say they may have you checking in on your mortgage a lot less frequently. The number of times that I have clients that have been with a lender for the last seven years, for instance, and have thought to review their loan, only to find they are a good 1.5% above market rates at the moment (which is huge) is quite scary. In saying that, it keeps me employed and, at the same time, makes the broker look like a hero, which is not a bad thing.
Many loans out there will have a “honeymoon period,” this is a loan that may, for example, be advertised as a four-year variable rate of 2.89% after that it jumps to the standard variable rate of 4.2%. Often because of our busy lives, we forget about the jump and will be on that higher rate for a long time before doing anything. Fixed rates are notorious for big jumps when coming out of their fixed-rate period. It would be good to have someone on your side that has the date diarised that your loan is maturing and give you a call. Great mortgage brokers should do this for you.
Often a client’s situation since establishing their loan will have changed. They may have started a business, or grown the family or one of the family has stopped working. They may have bought another property or want to start investing. They may have started having financial hardship. Here again, is where you might want to reassess your situation.
If you have a good mortgage broker, they should be reviewing your loan on an annual basis, and they should be the ones prompting you to do so out of their calendars. They should also be looking at what is out there in the market at present, and your current situation, and advise you on any options that may better suit you. A good broker will only move you if that new loan or scenario is going to be of substantial benefit to you. Quite often, there may be nothing better out there for you, or the benefit is so slight, it does not quantify moving. In this case, a good mortgage broker Adelaide should be holding your lender to account and asking the question with regards to the pricing on your loan, often the threat of moving a client will get a movement on a variable rate. While this is not always going to be successful, at least you are keeping your lender honest, and your loan may not be blowing out with regards to rate over the years. It never hurts to ask. We at Castle Mortgages are great mortgage brokers in Adelaide. If you are looking for a good Mortgage broker or would like to have a chat about your specific scenario, get in touch with us today.